IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v41y2009i27p3463-3476.html

A nonparametric revealed preference test of optimal intra-firm resource allocation

Author

Listed:
  • Jonathan Seaton

Abstract

The collective rationality hypothesis initiated by Chiappori (1988a) and applied by Seaton (1997, 2001) for a two-person household is used to distinguish the organizational behaviour of firms. Firms produce satisfaction to groups as traditional managerial and early behavioural theories of the firm of Williamson, Baumol and Marris suggest, as well as more modern principle agent models. Under certain conditions, intra-firm bargaining leads to a Pareto optimal outcome. What makes this work an important contribution is that it identifies a set of nonvacuous testable restrictions to empirically detect if firm-level data satisfy Pareto optimal behaviour for the main decision makers in the organization.

Suggested Citation

  • Jonathan Seaton, 2009. "A nonparametric revealed preference test of optimal intra-firm resource allocation," Applied Economics, Taylor & Francis Journals, vol. 41(27), pages 3463-3476.
    • Handle: RePEc:taf:applec:v:41:y:2009:i:27:p:3463-3476
    DOI: 10.1080/00036840701537836
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840701537836
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036840701537836?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Jonathan Seaton, 1997. "Neoclassical and collective rationality in household labour supply," Applied Economics Letters, Taylor & Francis Journals, vol. 4(8), pages 529-533.
    2. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-973, July.
    3. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    4. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    5. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-518, May.
    6. Bourguignon, Francois & Chiappori, Pierre-Andre, 1992. "Collective models of household behavior : An introduction," European Economic Review, Elsevier, vol. 36(2-3), pages 355-364, April.
    7. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    8. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
    9. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
    10. Uebe, Goetz, 1972. "A Note on Anthony Y. C. Koo, "Revealed Preference-A Structural Analysis."," Econometrica, Econometric Society, vol. 40(4), pages 771-771, July.
    11. Fortin, Bernard & Lacroix, Guy, 1997. "A Test of the Unitary and Collective Models of Household Labour Supply," Economic Journal, Royal Economic Society, vol. 107(443), pages 933-955, July.
    12. Elinor Ostrom, 2000. "Collective Action and the Evolution of Social Norms," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 137-158, Summer.
    13. repec:bla:jecsur:v:16:y:2002:i:4:p:533-64 is not listed on IDEAS
    14. Charlie Weir, 1997. "Corporate governance, performance and take-overs: an empirical analysis of UK mergers," Applied Economics, Taylor & Francis Journals, vol. 29(11), pages 1465-1475.
    15. Chiappori, Pierre-Andre, 1988. "Nash-Bargained Households Decisions: A Comment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(4), pages 791-796, November.
    16. Famulari, Melissa, 1995. "A Household-Based, Nonparametric Test of Demand Theory," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 372-382, May.
    17. Koo, Anthony Y C, 1971. "Revealed Preference-A Structural Analysis," Econometrica, Econometric Society, vol. 39(1), pages 89-97, January.
    18. Lundberg, Shelly J, 1988. "Labor Supply of Husbands and Wives: A Simultaneous Equations Approach," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 224-235, May.
    19. Hal R. Varian, 1983. "Non-parametric Tests of Consumer Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(1), pages 99-110.
    20. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
    21. Jonathan Seaton, 2001. "Bargaining versus non-cooperation; transaction costs within marriage," Applied Economics Letters, Taylor & Francis Journals, vol. 8(1), pages 37-41.
    22. David Romer, 2006. "Do Firms Maximize? Evidence from Professional Football," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 340-365, April.
    23. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    24. Varian, Hal R, 1984. "The Nonparametric Approach to Production Analysis," Econometrica, Econometric Society, vol. 52(3), pages 579-597, May.
    25. Jane H. Leuthold, 1968. "An Empirical Study of Formula Income Transfers and the Work Decision of the Poor," Journal of Human Resources, University of Wisconsin Press, vol. 3(3), pages 312-323.
    26. W. E. Diewert, 1973. "Afriat and Revealed Preference Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(3), pages 419-425.
    27. Frederic Vermeulen, 2002. "Collective Household Models: Principles and Main Results," Journal of Economic Surveys, Wiley Blackwell, vol. 16(4), pages 533-564, September.
    28. Dennis Leech & Miguel Manjon, 2003. "Corporate governance and game theoretic analyses of shareholder power: the case of Spain," Applied Economics, Taylor & Francis Journals, vol. 35(7), pages 847-858.
    29. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-349, June.
    30. Antle, R & Fellingham, J, 1990. "Resource Rationing And Organizational Slack In A 2-Period Model," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 28(1), pages 1-24.
    31. Paola Manzini, 1998. "Game Theoretic Models of Wage Bargaining," Journal of Economic Surveys, Wiley Blackwell, vol. 12(1), pages 1-41, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Laurens CHERCHYE & Thomas DEMUYNCK & Bram DE ROCK, 2010. "Noncooperative household consumption with caring," Working Papers of Department of Economics, Leuven ces10.34, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    2. Laurens Cherchye & Thomas Demuynck & Bram De Rock, 2011. "Revealed Preference Analysis of Non‐Cooperative Household Consumption," Economic Journal, Royal Economic Society, vol. 121(555), pages 1073-1096, September.
    3. Xu, Zeyu, 2007. "A survey on intra-household models and evidence," MPRA Paper 3763, University Library of Munich, Germany.
    4. Kato, Hironori & Matsumoto, Manabu, 2009. "Intra-household interaction in a nuclear family: A utility-maximizing approach," Transportation Research Part B: Methodological, Elsevier, vol. 43(2), pages 191-203, February.
    5. Chiappori, Pierre-André & Donni, Olivier, 2009. "Non-unitary Models of Household Behavior: A Survey of the Literature," IZA Discussion Papers 4603, Institute of Labor Economics (IZA).
    6. Pierre-André Chiappori & Olivier Donni, 2006. "Les modèles non unitaires de comportement du ménage : un survol de la littérature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 82(1), pages 9-52.
    7. Sabrina Bruyneel & Laurens Cherchye & Bram De Rock, 2012. "Collective consumption models with restricted bargaining weights: an empirical assessment based on experimental data," Review of Economics of the Household, Springer, vol. 10(3), pages 395-421, September.
    8. Kristian Orsini & Amadéo Spadaro, 2006. "Strategic weight within couples: a microsimulation approach," Working Papers halshs-00590395, HAL.
    9. Laurens Cherchye & Sam Cosaert & Thomas Demuynck & Bram De Rock, 2020. "Group Consumption with Caring Individuals," The Economic Journal, Royal Economic Society, vol. 130(627), pages 587-622.
    10. Laurens Cherchye & Thomas Demuynck & Bram De Rock, 2013. "Nash‐Bargained Consumption Decisions: A Revealed Preference Analysis," Economic Journal, Royal Economic Society, vol. 123, pages 195-235, March.
    11. Rana Hendy & Catherine Sofer, 2010. "A Collective Model of Female Labor Supply : Do Distribution Factors Matter in the Egyptian Case ?," Post-Print halshs-00482492, HAL.
    12. Laurens CHERCHYE & Bram DE ROCK & Jeroen SABBE & Ewout VERRIEST, 2010. "Commitment in intertemporal household consumption: a revealed preference analysis," Working Papers of Department of Economics, Leuven ces10.33, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    13. Daniela Del Boca & Christopher J. Flinn, 2004. "Modes of Spousal Interaction and the Labor Market Environment," CHILD Working Papers wp12_05, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    14. Dieter Saelens, 2022. "Unitary or collective households? A nonparametric rationality and separability test using detailed data on consumption expenditures and time use," Empirical Economics, Springer, vol. 62(2), pages 637-677, February.
    15. Hans Gersbach & Hans Haller, 2009. "Bargaining power and equilibrium consumption," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 33(4), pages 665-690, November.
    16. Rachel Connelly & Jean Kimmel, 2009. "Spousal influences on parents’ non-market time choices," Review of Economics of the Household, Springer, vol. 7(4), pages 361-394, December.
    17. Carvajal, Andrés & González, Natalia, 2014. "On refutability of the Nash bargaining solution," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 177-186.
    18. GholamReza Haddad, 2015. "Gender ratio, divorce rate, and intra-household collective decision process: evidence from iranian urban households labor supply with non-participation," Empirical Economics, Springer, vol. 48(4), pages 1365-1394, June.
    19. Heggeness, Misty L., 2009. "Evidence of shifts in intra-household allocation under exogenous changes in family policy and administrative procedures: The case of school enrollment in Chile," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49450, Agricultural and Applied Economics Association.
    20. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:41:y:2009:i:27:p:3463-3476. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.